COMPARATIVE PRIVATE LAW REASONABLESS OF CONTRACTS CONTENT

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COMPARATIVE PRIVATE LAW REASONABLESS OF CONTRACTS CONTENT

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Title: COMPARATIVE PRIVATE LAW REASONABLESS OF CONTRACTS CONTENT

1
COMPARATIVE PRIVATE LAWREASONABLESS OF
CONTRACTS CONTENT

University of Oslo
Prof. Giuditta Cordero Moss

2
Case I Limitation of liability

A software company sells an accounting programme
for law firms to a law firm
The programme turns out to be inadequate for
accounting of more than 40 accounts

3
Liability clause

General sale conditions
In case of non-satisfactory performance the
buyer may request the seller to replace the
programme with the newer version, to be developed
within 6 months.

4
Limitation of liabilityEvaluation of contracts
content

Norwegian law law firm may request avoidance,
reduction of price
German law law firm may request avoidance,
reduction of price (?)
UNIDROIT law firm may request avoidance,
reduction of price
PECL limitation of liability clause is valid (?)

Italian law limitation of liability clause is
valid (?)
English law limitation of liability clause is
valid
CISG limitation of liability clause is valid (?)

5
Case II Termination for immaterial breach

An enterprise borrows a considerable amount of
money from a financial institution, to be repaid
over a 10 years period
The loan agreement contains several covenants and
obligations for the borrower, i.a. to deliver to
the lender two copies of the quarterly accounts
not later than 2 days after the date of their
issuance
After 1 year the borrower fails to meet the
delivery term by 2 days
The lender deems this a breach of contract and
requires immediate repayment of the whole
outstanding amount

6
Termination-upon-default clause

Upon any breach whatsoever of any of the
Borrowers obligations, the Lender shall be
entitled to terminate this agreement with
immediate effect and to require the immediate
repayment of the whole outstanding amount. If the
Borrower offers to remedy the default, the Lender
shall be entitled, at its sole discretion, to
refuse such offer and to proceed to termination
of this agreement.

7
Termination for immaterial breachevaluation of
contracts content

Norwegian law The bank is not entitled to
terminate
German law The bank is not entitled to terminate
PECL The bank is not entitled to terminate (?)

Italian law The bank may terminate
English law The bank may terminate
UNIDROIT The bank may terminate

8
Case III Measurement of energy delivery

An energy producer enters into an agreement for
the supply of energy to several enterprises
The price to be paid is calculated on the square
area of each enterprise
After some years a meter for the measurement of
the actual consumption of energy is installed,
and the producer requests that one enterprise
starts making payments on the basis of the
consumption (higher than if based on the area)

9
Payment clause

The clause clearly states that payment is to be
made on the basis of the receipients area.
No renegotiation clause

10
Measurement clauseevaluation of contracts
content

Norwegian law Payment to be maid on the basis of
actual consumption

German law contractual clause to be followed
Italian law contractual clause to be followed
English lawcontractual clause to be followed
UNIDROIT, PECL, CISG contractual clause to be
followed

11
Possible aims of rules on fair terms

Protect the weaker contractual party
Ensure fair use of general conditions
Ensure reasonabless of bargains

12
Protection of the weaker contractual party
(consumer)

Norwegian consumer sale act 26, Formation of
contracts act 37
German BGB 437, 475, 138
Italian CC art. 1492, 1469bis
English sale of goods act sec 14

UNIDROIT art. 1.4
PECL art. 1103(2)

13
Fair use of general conditions

Norwegian law
Restrictive interpretation of what one party has
agreed to
36 avtl (since 1983) unreasonable terms may be
set aside or modified
Not for agreed documents
37 avtl extends control to general conditions
where one party is a consumer

14
Fair use of general conditions

German law
BGB 305 ff. (former AGB (1976))
Ineffective clauses, if prejudice to principle of
good faith
Contra proferentem
Surprising terms
Individual terms prevail

15
Fair use of general conditions

Italian law
Art. 1341 General terms are binding if they were
known or could have been known (diligence)
Particularly oppressive clauses to be
specifically undersigned

16
Fair use of general conditions

English law
Strict interpretation of exemption clauses
Contra proferentem
Fundamental breach?

17
Fair use of general conditions

UNIDROIT
Art. 2.19 Rules on formation
Art. 2.20 surprising terms
Art. 2.21 individual terms to prevail

18
Fair use of general conditions

PECL
Art. 2104 can be invoked if reasonable steps
were maid to bring them to the attention of the
other party
Art. 4109 not enforceable if significant
imbalance between parties

19
Reasonableness of bargain

Norwegian law
Avtl. 36 unreasonable terms may be set aside or
modified
If circumstances of the specific case (also
supervening) make the performance unfair for one
party
Fairness guidance in statutory rules, commercial
practices, common sense of justice
Restrictive use between parties with equal
bargaining power

20
Reasonableness of bargain